Before you purchase real estate in Japan, you need to know about depreciation cost.
Here, I want to explain about it by taking up an example.
So, even if you are not interested in this real estate, please read through this page.

Surely, this is not close to station, there is not renter yet.
But, price of this apartment is reasonable.
Please remember that when there is renter in room already, the sales price will be around 5,500,000 yen.

Built in March, 1984

Annual property tax : 22,972 yen

The amount of already accumulated reserve fund for repair is 11,307,971 yen

Exterior wall coating construction was conducted in 2009.

waterproofing work on the roof was conducted in 2011.

4 minutes walk to supermarket.
When company open new supermarket, they conduct investigation if the area has enough prospective customers.
So, when there is supermarket in neighborhood, it is one of proof that there are enough potential guests and renters.

Annual depreciation cost ( Genka shokyaku hi = 減価償却費 ).
When you purchase real estate and rent out, you cannot deduct purchase amount as expense ( Keihi ) at once.
Let’s say you purchase apartment of 100 yen and rent out.
And you receive rental fee of 10 yen per a year.
In this case, you can not sum up 100 yen as expense during 1 year.

You need to sum up a apart of purchase amount as expense.
And calculation of this part means depreciation.

In order to calculate depreciation cost, you need to break down purchase amount into building and lot.
Because, you can not depreciate lot. Valuation will not decrease even if you utilize it for long years.

In case of this apartment, purchase amount of building is assumed to 1,800,000 yen.
Assumed you purchase this apartment in August, 2014.

Durable years ( useful years = Taiyo nensu = 耐用年数 ) of Reinforced concrete building ( For residence ) : 47 years.
This apartment was built in March 1984 and you purchase it in August, 2014.
So, age of this building is 30 years and 5 months.
And in calculation of depreciation cost, it is 31 years.
Because, it is beneficial for taxpayers.
When age of property is older, it will shorten remainder of durable years and it will increase depreciation rate and it will increase deductible expense.

In case of used real estate, remainder of durable years extends by 20 %.
So, remainder of durable years of this apartment is
47 years – 31 years + 31 years × 0.2 = 16+ 6.2 = 22.2 years.
And in calculation of depreciation cost, it is 22 years.
Because, it is beneficial for taxpayers.
The remainder of durable years is shorter it will increase depreciation rate and it will increase deductible expense.

3 The amount of your your annual life insurance premium is 40,000 yen
4 The amount of your social insurance premium ( Shakai hoken ryo, for example national heal insurance tax = kokumin kenko hoken ryo = 国民健康保険, national pension plan premium = Kokumin nenkin = 国民年金 ) in
2014 is 280,000 yen
5 Deduction for dependent ( Fuyo kojo = 扶養控除。If taxpayer has child his or her age is 16 or over 16 as of 31th in December, taxpayer can apply Deduction for dependent. When child of taxpayer is over age of 16, she will go to school and it will cost a lot of money. So, Japanese government try to support taxpayer. ) : 380,000 yen
( As for deduction for dependent, please refer to ” Change in law relating to deduction for spouse and dependent in 2015. ” )
6 Basic deduction ( Kiso kojo ) : 380,000 yen
7 Real estate income : 345,308 yen
Total amount of deduction : 280,000 yen + 40,000 yeny + 380,000 yen + 380,000 yen = 1,080,000yen